TMI Blog2023 (11) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... the value particulars declared in the bill of entry as compared to the commercial invoice. Further, any exercise in re-determination of value other than the transaction value has to be adopted step-by-step on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 12 ibid - there are no such evidence or fact indicating that there was a mis-declaration of value and the value was re-determined as per the above legal provisions - the conclusion arrived by the Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, and thus the impugned order stating that the appellants have violated Regulation 10(d) ibid is also not sustainable. Violation of provision of Regulation 10(f) ibid - HELD THAT:- As the appellants had never met the importer/IEC holder, which indicated that they withheld the information contained orders, instructions or public notices relating to clearance of cargo from the importer of the goods, which led to the duty evasion in the said case . Even for an argument sake, if it is accepted that the appellants had not met the importer/IEC holder in person, it is not clear how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspended CB license of the appellants under Regulation 16(1) of ibid, with immediate effect vide Order No. 21/2018-19 dated 30.05.2018. Simultaneously, SCN No.10/2018-19 dated 30.05.2018 was issued to the appellants for initiating inquiry proceedings against violations of CBLR, 2018 due to failure of the appellants to comply with Regulations 10(a), 10(d), 10(f) and 10(n) ibid. Upon completion of the inquiry, vide Inquiry report submitted on 14.11.2019, and having not agreed to the said report, the Commissioner of Customs (General), Mumbai, being the licensing authority under Regulations 14 of CBLR, 2018 had passed the impugned order dated 28.08.2020. The above timelines indicate that the suspension was continued during the inquiry proceedings for about 27 months. Normally, immediate suspension action prior to conduct of regular inquiry is taken considering the serious violations of CBLR, 2018 by the action of the Customs broker - the Customs broker has already suffered a lot, as they were out of his normal business for almost 5 years and 5 months as of now. It is also noted that the livelihood of Customs broker and the employees is dependent upon the functioning of Customs broker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker License No.11/1981 assailing Order-in-Original CAO No. 22/CAC/CC(G)/PS/CBS (Adj.) dated 28.08.2020 (herein after, referred to as the impugned order ) passed by the learned Commissioner of Customs (General), New Custom House, Ballard Estate, Mumbai-1. 2.1. Briefly stated, the facts of the case are that the appellants herein is a Customs Broker (CB) holding a regular CB license issued by the Mumbai Customs under Regulation 7(2) of Customs Brokers Licensing Regulations (CBLR), 2018. A specific information was received by Customs Air Preventive Unit (APU) of R I Division of the office of the Principal Commissioner of Customs (Preventive), New Custom House, Mumbai on 04.03.2017 regarding mis-declaration of description of goods and its value in import of Button Tips covered under MAWB No.21756155842 and HAWB No. TSI 1702084 dated 01.03.2017 by M/s V.B. Exports, Bhayander-East, Thane for which corresponding Bill of Entry (B/E) No. 8726253 dated 01.03.2017 was filed by one Customs Broker M/s P.Cawasji Co. (CB License No.11/319). Accordingly, the imported goods were subjected to detailed examination by a chartered engineer M/s. Gattini Co. and representative samples were d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the appellants for having contravened Regulations 10 (a), 10(d), 10(f) and 10(n) of CBLR, 2018. Accordingly, the said Commissioner of Customs, had suspended the CB license of the appellants under CBLR, 2018 vide Order No. 21/2018-19 dated 30.05.2018; further he had issued a SCN No.10/2018-19 dated 30.05.2018 to the appellants for initiating inquiry proceedings under Regulations 17 of CBLR, 2018, against violations of CBLR, 2018 due to failure of the appellants to comply with Regulations 10 (a), 10(d), 10(f) and 10(n) of CBLR, 2018 and to appear before the Inquiry Authority. Further, an Inquiry officer was appointed by jurisdictional Commissioner for the purpose of Inquiry proceedings vide Order dated 30.05.2018. However, as he could not complete the said inquiry, one another officer was appointed subsequently as Inquiry Officer vide order dated 08.01.2019 which was received by the said inquiry officer on 06.05.2019. Upon completion of the inquiry, a report was submitted on 14.11.2019, and the Commissioner of Customs (General), Mumbai-I, being the licensing authority under Regulations 14 ibid had passed the impugned order dated 28.08.2020 for revoking CB License of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Naresh Jay Kumar Udeshi, Proprietor of the appellants CB. Hence they claimed that there is no violation of the obligations cast on the appellants under CBLR, 2018. They also pleaded that the appellants CB s license was suspended on 30.05.2018 and they are out of business for more than 5 years and their employees have lost their livelihood. Further, the department has also failed to complete the inquiry proceedings within the specified time limit and hence they claimed that on the grounds of delay alone this case is liable to be set aside. 3.2. In support of their grounds the appellants cited the following decisions: (i) K.S.Sawant Co. Vs. Commissioner of Customs (General), Mumbai 2012 (284) E.L.T. (Tri.- Mumbai) (ii) Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd. 2018 (361) E.L.T. 321 (Bom.) (iii) Perfect Cargo Logistics Vs. Commissioner of Customs (Airport General), New Delhi 2021 (376) E.L.T 649 (Tri. Del.) (iv) Delta Logistics Vs. Union of India 2012 (286) E.L.T. 517 (Bom.) In view of the above, they requested that impugned order be set aside and consequential relief be granted to them. 4. Learned Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written submission made by the appellants vide their letter dated 11.07.2020 and the record of oral submission made at the time of personal hearing on 30.07.2020, for considering the charges of violations against them, in respect of inquiry report having concluded as not proved , before passing the impugned order. Thus, we are of the considered view that sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them and there is no infirmity of the impugned order in not following the principles of natural justice in this regard. 6.2 We find that the Regulation 10 of CBLR 2018, provide for the obligations that a Customs Broker is expected to be fulfilled during their transaction with Customs in connection with import and export of goods. These are as follows: Regulation 10. Obligations of Customs Broker: - A Customs Broker shall - (a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which action under CBLR, 2018 has been taken against the appellants. As regards the first B/E dated 22.08.2016 is concerned, the imported goods was declared by the appellants on the basis of commercial invoice for imported goods No.ULT/191055 dated 18.08.2016 issued by M/s Upper Leader Limited, Hong Kong to the importer M/s V/B. Exports, Thane that was given by the importer, wherein the description of the goods was mentioned as Button Tips Size: 16.8 X 28 (Grade:YG7, 8200 Pcs.) with the unit price being declared as USD $4.55 . Accordingly, the appellants had declared the description of the imported goods and value in the bill of entry exactly matching with the details as given in the invoice supplied by the importer. Similarly, in respect of the second B/E dated 27.08.2016, the appellants had declared the description of the goods as Button Tips Bore well Parts Size: 16.8 * 28 *.88 with the unit price being declared as USD $5.00 as per commercial invoice No. ULT/191056 dated 20.08.2016. From the above factual details, we find that the appellants CB had declared the description of the imported goods and value in the aforesaid two B/Es exactly matching with the details as giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of any document to prove the claim of mis-declaration, it is difficult to fasten such liability on the appellants CB. 7.3. From the above, we find that appellants have duly filed the bill of entry as per the documents given by the importer and they were not aware of the mis-declaration of description/value of the imported goods. In the instant case, the mis-declaration was found by the department only on the basis of specific information received by the Customs APU, R I Division on 04.03.2017, i.e., after more than 6 months from the date of clearance of goods by the appellants and upon conducting physical examination of goods on 07.03.2017 which were imported subsequently, upon receipt of test report, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as such mis-declaration was not known to the appellants, the non-compliance by the importer of declaring the alleged incorrect value of imported goods, could not have been brought to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs by the appellants, as the Appraising group i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r these rules. Rule 3. Determination of the method of valuation . - (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted: Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report dated 19.04.2017 received from the Chartered Engineer had suggested that the minimum average price for Button Tips when purchased in bulk was ascertained as USD $35 Per Kg. which was about 7.7 times higher than the declared value of USD $4.55 for subject goods. We find that such an allegation made at the initial stage of issuing show cause notice and later at the findings stage in the impugned order requires factual details or evidence in the form of documents, to state that there is mis-declaration in the value and the same is attributable to the appellants CB, in order to invoke the violation of due-diligence having not been undertaken by the appellants in verification of value of imported goods. We find that there is no such evidence and on the contrary the declaration made in the bill of entry corresponds to the value declared in the commercial invoice. Thus, we are of the considered view that the conclusion arrived by the Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, and thus the impugned order stating that the appellants have violated Regulation 10(d) ibid is also not sustainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the importer/exporter by Customs Broker in Circular No. 9/2010-Customs dated 08.04.2010, the extract of the relevant paragraph is as given below: (iv) Know Your Customs (KYC) norms for identification of clients by CHAs: 6. In the context of increasing number of offences involving various modusoperandi such as misuse of export promotion schemes, fraudulent availment of export incentives and duty evasion by bogus IEC holders etc., it has been decided by the Board to put in place the Know Your Customer (KYC) guidelines for CHAs so that they are not used intentionally or unintentionally by importers/exporters who indulge in fraudulent activities. Accordingly, Regulation 13 of CHALR, 2004, has been suitably amended to provide that certain obligations on the CHAs to verify the antecedent, correctness of Import Export Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data or information. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/customer is enclosed in the Annexure. It would also be obligatory for the clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The Commissioner noticed in the impugned order that any two documents could be obtained. The appellant had submitted two documents and this fact has also been stated in paragraph 27(a) of the order. It was obligatory on the part of the Commissioner to have mentioned the documents and discussed the same but all that has been stated in the impugned order is that having gone through the submissions of the Customs Broker, it is found that there is no force in the submissions. The finding recorded by the Commissioner that the required documents were not submitted is, therefore, factually incorrect. 35. The Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulation 10(n) of the Licensing Regulations. 10.4. Further, we also find that the Hon ble High Court of Delhi has held in the case of Kunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r revoking the licence or imposing the penalty and keeping the licence under suspension should be Reasonable period , depending on the facts and circumstances of each case. There cannot be any absolute principle, which can be laid down to determine as what would be reasonable period but it would be dependent on the facts and circumstances of each case since on one hand, the purpose of prescription of the time limit by the Regulation is to cast a duty on the Revenue Authorities to act within the time frame since it adversely affects the interest of the licensee and on the other hand the licensee should not be permitted to take an advantage of some delay at the instance of the Revenue, which is beyond its control since the revenue administration needs to be granted certain concessions which may be on account of administrative exigencies, and the department working at different levels through different persons. The principles of fairness and equity demands that when there is deviation from the time schedule prescribed in the Regulation, the Revenue enumerates the reasons and attributes them to an officer dealing with it and also accounts for every stage at which the delay occurs. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 30.05.2018. Simultaneously, SCN No.10/2018-19 dated 30.05.2018 was issued to the appellants for initiating inquiry proceedings against violations of CBLR, 2018 due to failure of the appellants to comply with Regulations 10(a), 10(d), 10(f) and 10(n) ibid. Upon completion of the inquiry, vide Inquiry report submitted on 14.11.2019, and having not agreed to the said report, the Commissioner of Customs (General), Mumbai, being the licensing authority under Regulations 14 of CBLR, 2018 had passed the impugned order dated 28.08.2020. The above timelines indicate that the suspension was continued during the inquiry proceedings for about 27 months. Normally, immediate suspension action prior to conduct of regular inquiry is taken considering the serious violations of CBLR, 2018 by the action of the Customs broker. Otherwise, the regulations provide for conducting regular inquiry, while license of Customs broker is in operation, for taking a decision on the suspension or revocation of the license. If the entire process of suspension proceedings is unduly delayed, then the very purpose of prescribing specific time limits in relation to conduct of inquiry proceedings is nullified and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined as cause for undue delay, and thus the inordinate delay shown on account of administrative reasons in the background of the above detailed discussion, cannot be accepted as reasonable grounds in terms of the test laid down by the Hon ble High Court of Bombay. 14.1. The records of the case indicate that the appellants had obtained a written authorization letter dated 15.05.2016 from the importer M/s V.B. Imports, Thane mentioning that they authorize the appellants for clearance of import/export consignment on their behalf from Customs JNPT/Nhava Sheva/Mumbai. The importers also gave a declaration that they would be responsible for any discrepancy or mis-declaration found in their documents or goods, in the said authorization letter to the appellants. The letter also enclosed self-certified copies of Import Export Code Number (IEC) of importer, KYC documents and shipment documents. The conclusion of the Commissioner of Customs (General) in respect of sub-regulation 10(a) ibid is on the basis of the statement dated 20.05.2017 given by Shri Naresh Jay Kumar Udeshi, Proprietor of appellants CB firm, which state that on being shown the GATT declaration annexed with the docket o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. As regards the violation of Regulation 13(a), the adjudicating authority himself has observed that the I have no doubt to say that the CHA might have obtained the authorisation but it is surely not from the importer. Therefore, the authorisation submitted is not a valid one . This finding is based on a presumption. Obtaining an authorisation from the importer does not mean that the same should be obtained directly; so long as the concerned import documents were signed by the importer, it amounts to authorisation by the importer and, therefore, it cannot be said that there has been a violation of Regulation 13(a). The question now is whether revocation of licence is warranted for such a violation. In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Commissioner of Customs (General) to restore the CHA licence subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations .. We approve the aforesaid observations of the CEGAT, West Zonal Bench, Mumbai and unhesitatingly hold that this misconduct has to be seriously viewed. 14.4 In view of the above discussions and on the basis of the judgement of the Hon ble Supreme Court in the case of K.M.Ganatra (supra), we find that the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importer through an intermediary logistics operator in ensuring that all documents are genuine, the signatures affixed in the documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent we find that the appellants CB are found to have not complied with the req ..... X X X X Extracts X X X X X X X X Extracts X X X X
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